SynopsisFederal Reserve policymakers expressed concern over inflation at their last meeting. Many officials indicated a rate hike would be necessary if inflation persists.

The Fed held interest rates steady, but three dissented in favor of an increase. Discussions also covered potential overhauls of the Fed's operational procedures.

Investors anticipate potential rate hikes later this year. S.

central bank's 2% target, Reuters report based on the minutes of the Federal Reserve's July meeting session. Members of the FOMC who backed the rate hike "remarked that ⁠price ⁠pressures appeared broad-based and judged that the (policy-setting) Committee should adopt a more restrictive policy stance to meet its commitment to achieving its price-stability and maximum employment goals on a sustained basis," the minutes of the July 28-29 meeting said.

If not done, it would risk "a steeper and potentially more costly sequence of tightening moves at a later stage", they noted. 75%, with three policymakers dissenting and calling for a 25-basis-point rate hike.

A larger group of "many" participants "assessed that policy tightening would likely be necessary if inflation did not decline," according to the minutes, Reuters reported. The minutes, which covered Fed Chairman Kevin ⁠Warsh's second meeting ‌at the helm of the central bank, indicated that policymakers were already examining some of the broader issues he wants to address as part of a potential overhaul of the Fed's operations.

Participants viewed an upcoming task ⁠force review of how the Fed manages its balance sheet as an "opportunity for a comprehensive discussion." However, "many" participants at the meeting "reaffirmed that the primary means of adjusting the stance of monetary policy should be through changes in the target range for the federal funds rate," rather than through changes to the Fed's asset holdings.

Warsh also sought "input from the Committee" on whether the Fed should reduce the number of meetings to six a year from the current eight, giving policymakers a full two months of data to review between meetings. The minutes said no decisions were made on the matter, and the 2026 meeting schedule would remain unchanged.

The minutes made no mention of support for a rate cut, highlighting how the Fed’s policy debate has shifted over the past year. At the start of the year, policymakers expected the central bank could lower borrowing costs as inflation eased.